This study examines the relationship between complex oral language and phonological awareness in the preschool years. Specifically, the authors investigate the relationship between concurrent measures of oral narrative structure (based on measures of both story retell and generation), and measures of blending and elision in a sample of 89 children between 4 and 6 years of age. A hierarchical linear regression was conducted to determine whether oral narrative structure explained unique variance in skill in blending and elision over and above that explained by vocabulary and after controlling for a number of factors known to contribute to phonological awareness outcomes (age, nonverbal reasoning ability, phonological memory, letter knowledge, word reading). The results of the study support the authors' hypothesis of an association between narrative structure and phonological awareness, and between vocabulary and phonological awareness. The findings are interpreted within a theoretical framework that posits that common structural and processing demands underlie oral narrative discourse and phonological awareness.